Applied Innovation is Fueling “Spaceship Earth”
The Singularity Think Tank Gathers for a Reality Check on Innovation — Part 1
- 30 Singularity Think Tank experts and industry executives held animated sessions to assess the status quo of applied innovation
- An unexpected ally in reducing CO2 emissions: embracing the vilified Oil & Gas giants could accelerate the long-awaited turnaround
- Water scarcity and wastewater management: an overlooked sustainability challenge
- Microorganisms: tiny beings with big impact
The Singularity Think Tank (STT) is an international community of entrepreneurs, industry insiders, and scientists dedicated to applied innovation. It is hosted by Zurich-based investment advisory boutique The Singularity Group (TSG), which incorporates insights from the STT directly into its strategies. The STT is the only think tank in the world of its kind and size committed to feasible, applied innovation. On March 8, 2024, the STT met for an annual meeting and the subsequent semi-public “TSG Applied Innovation Day” at Zurich’s FIVE Hotel to discuss the latest developments in applied innovation. This is part one of two introducing some of the main findings.
Unlike many investors’ focus on R&D stage innovations, TSG focuses specifically on feasible, applicable innovations. “Of all revenues of listed companies worldwide, just four percent are attributable to applied innovation,” said TSG’s CEO Evelyne Pflugi based on the company’s innovation screening methodology. Applied innovation stands for the feasibility of technologies, i.e., their value-generating integration into existing value chains and systems. Applied innovations distinguish themselves from anticipated or “hyped” innovation. “Investing in applied innovation is like looking for a needle in a haystack.”
Energy Transition: After the Hype Comes the Hangover
Among the participants was energy expert James Khedari, whose career spans more than 20 years in traditional and renewable energy. He shared his sober assessment of some of the much touted energy transition technologies. “After the hype around reducing and offsetting CO2 emissions, and much noise around new, highly praised technologies, now comes the hangover. Many applications are not yet scalable, and a real turnaround would require a lot of capital,” said Khedari.
Hydrogen is a prime example. While numerous projects and technologies were highly praised and politically supported, the balance of successful projects looks meager, he explained. Khedari calls for a change of approach in which Big Oil companies, the supposed “villains” of the industry, are recognized for their potential as key enablers of low-emission energy sources. Whereas startups have largely squandered their opportunities due to overheated valuations, the “giants” have organically developed more economically relevant technologies. The time of demonization is over, he believes: “Ultimately, companies like BP and Shell are equipped to roll out new technologies and alternative energy sources on a large scale and to take the necessary risks. They will play a key role in the future, for example, in feeding solar power into the grid and storing it,” Khedari concluded.
Water Scarcity: The Overlooked Sustainability Challenge
In contrast to the headline-grabbing energy transition, a sustainability problem that receives surprisingly little attention given its severity is water scarcity. David Balsar, General Manager of Innovation and Ventures at Israeli water utility Mekorot, dissected the innovations in water management. For example, among the new solutions for agricultural water supply, which accounts (on average) for 70 percent of all freshwater withdrawals globally, are drip irrigation systems and the reprocessing of wastewater into “new water.” Using new methods, wastewater can even be turned into drinking water, as successful projects in Singapore and Los Angeles have demonstrated: “In Los Angeles, this is being marketed under the thirst-quenching label ‘From Toilet to Tap.’”
Other interesting developments can be found in the area of water desalination and wastewater management. Aging water pipes cause leakage of up to 80% in some areas of Chicago, and a still exorbitant 40% in large cities in the United Kingdom. Making the infrastructure “watertight” requires massive investments, but also smart innovations such as advanced sensors and small robots for detecting and fixing leaks.
Imitating Nature
Discussing developments in the novel food sector, experts agreed that cell-based meat alternatives are still struggling to find consumer acceptance, facing difficulties with getting the texture right, as well as with regulatory obstacles. Plant-based products, while seemingly more advanced, have come under scrutiny due to their composition, taste, and their high amount of additives. Steaks, burgers, and sausages from legumes, in contrast, are increasingly finding consumers’ appetite. “Direct protein extraction from plants is promising in many aspects: the result is pure, the production is resource-saving, and the nutritional value is high,” commented Anik Thaler, CEO of Swiss alternative protein company Fabas.
Tilo Hühn, PhD, Professor of Food Composition and Process Design at Zurich University of Applied Science in Wädenswil, called for a more fundamental rethinking of our food systems, arguing that “Sustainability is not enough. The goal should be regeneration,” referring to agricultural practices and approaches designed to restore and enhance the health of ecosystems through natural processes beyond merely sustaining natural resources. Huehn pointed to the fact that CO2 is indeed the building block of all living things: “CO2 is not just something bad, but also a valuable resource.”
In this context, Hühn highlighted that innovations we have today were created for the conquest and exploration of outer space. “It’s time to realize that the Earth itself is a spaceship — with no emergency exit,” Hühn quoted a famous metaphor deriving from the nuclear catastrophe in Fukushima 2011. “Humans and industrialization produce waste, while nature is a well-functioning circulatory system. Humanity must orient itself towards nature accordingly, value chains should be replaced by value systems,” observes Hühn. “Not without reason, most innovations, just take airplanes, are imitations of nature,” added Pflugi.
Impressive examples of nature as a problem solver were presented by Jürgen Eck, PhD, co-founder and former CEO of Brain AG, and a member of the German Federal Government’s Bioeconomy Council, in his keynote on microorganisms and enzymes featured within a session titled ‘Hype vs Applied Innovation– A Reality Check’. These tiny creatures and biocatalysts are already used in numerous modern household cleaning agents, where they “eat away bacteria and dirt just like Pac-Man.” Microorganisms can also play a significant role in textile recycling, the upcycling of plastics, and the production of sugar alternatives. “In the past, the winners in the market were those who owned raw materials. Today, the winners are the owners of technologies,” Eck reinforced the reality of value creation and ownership in the modern world.
About The Singularity Group
The Singularity Group (TSG) quantifies applied innovation for investors in listed equities. TSG is the initiator of the Singularity Index™ (Bloomberg ticker: NQ2045), a global, all-sector benchmark and gold standard for applied innovation. The Singularity Strategies include The Singularity Fund (UCITS Lux), Singularity Reshoring(UBS AMC), and the Singularity Small&Mid (UBS AMC). The Swiss investment advisory boutique works closely with the Singularity Think Tank, a network of entrepreneurs and academics with deep insights into innovation value chains. Their input forms the foundation of TSG’s proprietary innovation scoring system that quantifies the engagement of companies within a set of curated Singularity Sectors worldwide across all market capitalizations and industries. The Singularity Innovation Score (SI-Score; see below) defines how much value listed companies are generating through applied innovation.
More: www.singularity-group.com
The Singularity Innovation Score (SI-Score): A company’s SI-Score represents the percentage of its revenues associated with innovation. It reflects a company’s ability to create innovation- versus commoditized -business and -cash flows, and its ability to participate in technological evolution. Changes in the SI-Score are just as important as the absolute value. A company’s SI-Score relative to its overall GICS sector can say a lot about the competitive standing and ability to gain and maintain market share. Regional SI-Scores can be used to evaluate the innovation power of markets as well as to gauge companies’ standing in different regions.
Innovation Revenues: 4% of a 74 trillion USD global market: In 2022, the total revenues generated by the World’s listed equities amounted to USD 74 Trillion. TSG’s unique expert-led innovation screening and scoring methodology allows us to divide that amount into innovation revenues and non-innovation revenues. In 2022, roughly 4% (USD 3 Trillion) of global revenues qualified as innovation revenues.
